Adelind Van Driessche October 17 2022 NFTs: why it is essential for brand owners to update their IP portfolios GEVERS | Intellectual Property - International Adelind Van Driessche Intellectual Property What are NFTs?MetaBirkin bagCommentIn 2021, Collins Dictionary chose "non-fungible token" (NFT) as its word of the year. While many people have heard about the person who paid $69 million for a NFT of a video by Beeple, or Jack Dorsey, the founder of Twitter, selling the first tweet for just under $3 million through an NFT, most business and brand owners are still oblivious as to what an NFT is and how important it can be for an IP portfolio.What are NFTs?An NFT is a blockchain-based token that represents a unique asset such as a piece of art, music, in-game item or video. An NFT is an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical. However, an NFT is not the image or sound file itself, nor does it contain such file. It is simply a unique blockchain-based token which proves that an individual is the only owner of that digital asset.While the owner of an NFT can prove that it owns the NFT, that is all they own and not necessarily anything more than that. In the aforementioned case of Jack Dorsey's first tweet, the buyer only obtained an autographed certificate of the tweet. The copyright to the tweet remained with its author, Jack Dorsey. While the buyer spent millions on this purchase, the buyer is not authorised to use the tweet. The buyer of an NFT should always investigate who owns the underlying asset. Typically, the sale of the NFT does not include the sale of the underlying asset or any IP rights related thereto.Non-believers will see this new technology as a way of easily fooling people, but the observant will see its added value for their IP rights. But with potential new value also comes new obstacles and dangers for IP portfolios.MetaBirkin bagFashion pioneer Hermès recently filed a lawsuit against a third party that was selling its famous Birkin bags in the metaverse. Mason Rothschild sold unauthorised Birkin bag NFTs for prices that were not too dissimilar from the original prices of Birkin bags. Hermès argues that Rothschild had violated its trademark rights.The question remains as to whether Hermès can successfully take legal actions against those that purchase the Birkin bag NFTs. Under a strict interpretation of trademark law, the owner of a registered trademark can only object to the use of its trademark for identical or similar goods and/or services. Taking this into account, the trademark owner would need a registration for NFTs (or similar). Considering the relatively new popularity of this emerging blockchain technology in intellectual property, it is highly unlikely that many trademark owners have a registration covering such goods. That said, the argument may be made that HERMÈS is a well-known trademark. Therefore, the holder is entitled to act against the use of identical or similar signs, even if the goods or services are dissimilar in as far as such use is detrimental to the reputation or distinctiveness of the mark.CommentAlthough not endorsed by Hermès, the MetaBirkin is just the latest in a series of NFT launches of high-end and luxury fashion. There alone lies a big challenge for trademark owners in ensuring the protection of their rights. By reviewing IP portfolios and identifying situations where filing a new trademark application for NFTs is not only strategic but also defensive, trademark owners can better protect their brands by creating a reasonable claim of likelihood of confusion if designers or artists, not affiliated with those brands, launch their own NFTs.For further information on this topic please contact Adelind Van Driessche at GEVERS by telephone (+32 2 715 3711) or email ([email protected]). The GEVERS website can be accessed at www.gevers.eu.